How is the Housing Market, Really?

If you talk to an accountant, they’ll tell you numbers don’t lie. They’ll also tell you that numbers can be manipulated to present differing points of view, depending on the presenter or goal. So, here are some numbers that tell quite a different story than all the negative headlines and reports we’re being inundated with this year about our local recession and its aftershock on the local housing market. If there is an aftershock, it’s the reverberation of buyer frustration of not being able to find a home to purchase.  

For a comparison of our housing market, I prefer to use month to month statistics so let’s look at January 2017 compared to 2016.  Total sales volume increased 16%. Days on the market declined 26%. Number of sold homes increased by 23%. These statistics do not include condos or mobile homes. One of these statistics could be an anomaly but put it all together and we have a housing market that’s generating more activity than a year ago both in total volume and number of homes sold.

In my opinion, this rush of home buying is due to the expected interest rate increase hinted by the feds for March and two other increases before the end of the year. Anchorage has a lack of residential inventor, both resale and new, particularly under $500,000 which seems to be the pressure point for buyers.  In the past thirty days, we’ve had calls for both two-story and ranch style new homes under $500,000. What is particularly interesting in the resale market is the request for closing costs and the length negotiations to come to an agreed upon price. This is reflective in a one percent decline in the average sales price to $347,590 –a price point that is virtually impossible for single family home builders to meet.   

Eagle River is an interesting sub-market. Taking into consideration all price ranges, it has only a 2.18 supply of homes. It does, however, have a six month supply of homes priced between $500,000 and $749,000. It’s most popular price range is between $300,000 and $449,000. Last year, Eagle River had no sales over $1 million and only two sales above $750,000. 
 
Bottom line is lack of inventory continues to create stability in the market as anxious buyers rush to purchase before mortgage rate increases push them out of the market. That urgency, however, doesn’t prevent them from attempting to negotiate price and closing costs. Even with no or modest appreciation, what’s affordable today may not be affordable tomorrow because of interest rate hikes.